Trio Of House Bills Hope To Legitimize Pot Business In East Bay

Although medical marijuana dispensaries are legal in California, good luck in accessing basic financial instruments provided by banks, who fear the businesses are a front for criminal activity.

Rep. Pete Stark

So, if you cannot provide financial documents as a dispensary owner during tax season, how can you deduct business expenses most other companies frequently enjoy? You can’t, but three bills offered this week, including one by East Bay Rep. Pete Stark will go far in legitimizing the business activities of the controversial industry.

“Our tax code undercuts legal medical marijuana dispensaries by preventing them from taking all the deductions allowed for other small businesses,” Stark said while introducing H.R. 1985. “While unfair to these small business owners, the tax code also punishes the patients who rely on them for safe and reliable access to medical marijuana prescribed by a doctor.

Critics of the banks treatment of dispensary owners say withholding the ability of these business owners from deducting expenses forces them to conduct business in the sometimes shadowy world of cash-only transactions, which make it far more susceptible to crime.

In February, the Berkeley Patients Group appealed a ruling to pay $6.5 million in taxes on $51 million in receipts earned by the large dispensary. The State of Equalization denied their argument. Oakland’s Harborside Health Center is also believed to be audited by the IRS.

A representative for a medical marijuana special interest group told The Hill last week, “These businesses that operate legally under state law should be able to deduct their business expenses like anyone else,” said Steve Fox of the National Cannabis Industry Association. “They want to be transparent about their operations and pay their fair share of taxes. The laws should allow and encourage them to do so.”

A separate bill authored by Colorado Rep. Jared Polis hopes to take aim at the hesitance by banks to provide services to legal dispensaries owners.

Massachusetts Rep. Barney Frank offered yet another bill Wednesday that would protect legal users of medical marijuana from prosecution by the federal government. Fear over the involvement by the Department of Justice was initially alleviated by U.S. Attorney General Eric Holder two years ago, but proponents of medical marijuana have voiced displeasure recently over a renewed effort to contain the federal ban in California.

“The time has come for the federal government to stop preempting states’ medical marijuana laws,” Frank said in a defiant defense of states’ rights. “For the federal government to come in and supersede state law is a real mistake for those in pain for whom nothing else seems to work. This bill would block the federal prosecution of those patients who reside in those states that allow medical marijuana.”

Like many bill delving into the liberal aspects of society, the Republican-controlled House of Representatives is unlikely to be keen on adding regulations to controversial commerce such as medical marijuana let alone legitimizing its prevalence, although GOP presidential candidate Rep. Ron Paul of Texas co-sponsored each of the bills.